Norways’s Seadrill makes mandatory bid for Eastern Drilling UPDATE

Norways’s Seadrill makes mandatory bid for Eastern Drilling UPDATE

April 17, 2007 Filed Under: Mining Services  

Norwegian oil industry offshore services group Seadrill Limited announced it has decided to make a mandatory bid for the outstanding shares in Eastern Drilling ASA — responding to a fine imposed by the Oslo Bors — at a price of 135 nkr a share.

The company said that a draft offer document for the bid has been filed with the Oslo stock exchange.

“The offer price is in line with what has been communicated to Seadrill by the Oslo Stock Exchange as the price required according to the decisions of the Oslo Stock Exchange’s Appeals Committee on this issue,” the company said in a statement.

Eastern Drilling closed flat at 130 nkr, before the announcement, while Seadrill ended the session down 0.5 pct at 101 nkr.

On March 22 Seadrill Ltd said it is “diligently working” to produce a new mandatory offer for Eastern, as the deadline set by the Oslo Bors for a new offer passed.

Seadrill has been in a dispute with the Oslo Bors over its responsibility to make a mandatory offer for the remaining shares in Eastern Drilling. In last month’s statement it made no reference to the fact it has been warned it could face fines of up to 2 mln nkr per trading day for each day after March 21 that it did not present a new offer.

However, the firm did say it was working to come up with a bid which could “satisfy the requirements imposed, while at the same time, safeguarding the legitimate Seadrill interests” by reducing and crystallising the losses that come about as a result of these requirements.

Seadrill on Monday, in its stock exchange announcement, said that Seadrill “will aggressively seek full compensation from the Oslo Stock Exchange for the financial and other losses incurred by it as a consequence of being forced to make this bid.” The company added that, “the board concluded that it had no other options available than to make the mandatory offer in view of the dramatic daily penalty of 2 mln nkr, increasing to 4 mln nkr, which now has been set by the Oslo Stock Exchange as a means of forcing Seadrill to act in accordance with the decisions of its Appeals Committee.” In January, Seadrill said it was filing a lawsuit seeking the cancellation of a demand made in December by the Oslo Stock Exchange Appeals Committee (SEAC), that Seadrill make a new mandatory offer for Eastern Drilling.

On Dec 12, SEAC said Seadrill must make a new offer to buy the remaining shares in Eastern Drilling, after rejecting Seadrill’s offer to cut its stake in Eastern from 63.3 pct to below the 40 pct mark.

The Seadrill dispute with the Oslo stock exchange is over allegations that it acted in concert with the broker Carnegie, when Carnegie acquired shares in Eastern Drilling last year.

Eastern Drilling claims the action by Seadrill and Carnegie stymied a takeover bid by Ocean Rig ASA of 135 nkr per share for Eastern. Seadrill then made its own takeover offer at 92 nkr a share, having taken its stake above the 40 pct mandatory threshold for making a bid.


Share this post